Adjustable Rate Mortgage (ARM)
Adjustable Rate Mortgage (ARM) – Flexibility for Your Home Financing
What is an Adjustable Rate Mortgage (ARM)?
Benefits of a Adjustable Rate Mortgage (ARM
✅ Lower Initial Interest Rates – Start with a more affordable monthly payment.
✅ Flexible Terms – Choose between 5, 7, or 10-year fixed periods.
✅ Potential for Lower Payments in the Early Years – Beneficial if you plan to sell or refinance before the rate adjusts.
✅ Access to Higher Loan Amounts – Sometimes more affordable compared to fixed-rate loans, making larger homes more accessible.
✅ Ideal for Short-Term Homeownership – Perfect if you plan to move or refinance before the rate adjusts.
How Does an ARM Work?
Step 1: Choose Your Fixed-Rate Period
ARMs have an initial fixed-rate period (e.g., 5, 7, or 10 years), during which the interest rate remains stable.
Step 2: Understand the Adjustment Terms
- After the fixed period, the interest rate adjusts annually based on a specific market index (e.g., SOFR).
- Rate changes are subject to caps that limit how much they can increase per adjustment and over the life of the loan.
Step 3: Get Pre-Approved
A lender will assess your credit, income, and financial situation to determine eligibility and loan terms.
Step 4: Find Your Home & Make an Offer
Once approved, search for a home that fits your budget and submit a purchase offer.
Step 5: Lock in Your Initial Interest Rate
Secure your low fixed-rate period before market conditions change.
Step 6: Loan Processing & Underwriting
Your lender will review all financial details, verify your documents, and approve the loan.
Step 7: Closing & Move In
Sign the final documents, finalize your loan, and start enjoying homeownership